The Walters Agency Podcast

Why a Personal Liability Umbrella Can Save Your Home, Retirement, and Sanity

• Timothy Walters • Episode 17

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 How Does Personal Liability Coverage Protect Homeowners?

A birthday song, a crowded deck, a sudden collapse—no one expects a normal gathering to turn into a liability nightmare. That story anchors our deep dive into personal liability umbrellas and why they’re one of the smartest, most affordable ways to protect your home equity, retirement savings, and future income from lawsuits that leap past standard policy limits. We walk through how an umbrella actually works—stacking on top of your homeowners and auto coverage—so when a claim exceeds those caps, you’re not writing checks from your nest egg.

We get specific about numbers, trade-offs, and real-world risk. You’ll hear why we aim for strong underlying limits (think $500,000 on home and robust auto liability), then add $1–$5 million in umbrella protection depending on your total exposure. We unpack where coverage applies, why many carriers now require properties to be listed to extend protection, and how to handle rentals, cabins, or vacant land without creating a single, thin liability pool. You’ll also learn why severe auto accidents can outpace even high primary limits and how an umbrella helps make injured parties whole without bankrupting you.

Throughout, we keep the advice practical: audit your assets, confirm what each policy truly covers, schedule additional properties or secure separate policies, and align umbrella limits with the size of your financial life. Whether you’re a homeowner with a growing 401(k), a family with teen drivers, or someone juggling a primary home and a weekend cabin, this conversation gives you a clear framework to reduce risk and sleep better at night. If you’re ready to tighten your coverage and protect what you’ve built, subscribe, share this with a friend who needs a nudge, and leave a review with the biggest question you still have about umbrellas.

To learn more about The Walters Agency visit:
https://www.brightway.com/agencies/tn/knoxville/0237/team
The Walters Agency
7009 Asheville Hwy
Knoxville, TN 37924
423-417-2070

SPEAKER_00:

Welcome to the Walters Agency Podcast, where insurance makes peace of mind. Hosted by licensed insurance agent and owner Timothy Walters, we're here to help families, homeowners, and small business owners throughout East Tennessee protect what matters most. Our mission: creating win-win-win solutions for insurance. Let's dive in.

SPEAKER_01:

Timothy breaks down how this often overlooked policy can save homeowners from major legal and financial headaches. Welcome back, everybody. Skip Monty, co-host slash producer, back in the studio with Timothy Walters, owner of and licensed insurance agent and owner of the Walters Agency. Timothy, how's it going?

SPEAKER_02:

It's going good, Skip. How are you doing?

SPEAKER_01:

Doing just fine and uh intrigued about today's subject, personal liability insurance. Let's get right into it. How does personal liability coverage protect a homeowner?

SPEAKER_02:

Yeah, well, Skip, I will I will just go into this and tell the story I told you earlier, because you know I like to tell stories. This isn't one of mine. Actually, it was relayed to me by a fellow agent just earlier today. Actually, I was uh hearing about it. So this gentleman had a client, had a homeowner's policy, and they were having a birthday party at this house with a deck, you know, nice, tall deck, beautiful, I'm sure. And they had, you know, I don't know, 25, 30 people on the deck singing happy birthday to the lucky son or daughter or dog. I don't know. Things that were kind of weird these days. And the deck collapsed right out from under them. Yeah, yeah. Fortunately, nobody was killed, nobody was even apparently seriously injured. But you know, I think it's but for the grace of God, right? I mean, that's probably not the likely outcome when you have that many people on a structure that collapses. So anyway, you know, this this agent was like, yeah, and that's why we always recommend people have, you know, a personal umbrella policy to go with their home and auto. Because weird stuff happens, and you know, if you if 20 plus people become injured or God forbid killed on your property, odds are somebody's gonna sue you, right? And uh you don't know if the deck collapsed because they had too many people on it, or because the workers didn't do the work correctly, or it was an old deck. We don't know those details, right? But you want to make sure that your liability at your at your home at least is protected because if you have assets, which a home is, which your car is, if you have property, that's an asset, if you have retirement accounts, those are assets. Those are all things that can be grabbed if somebody sues you and wins. You know, I promise you the courts will liquidate your assets to fulfill you know whatever financial obligation they decide you have towards people who were injured due to your negligence or you know, direct action or something like that. So having a personal liability umbrella policy, a pluck, most people just call them umbrellas, that's important. Because again, if you own a house, you have a pretty major asset, okay, just by owning a house. Plucks, liability umbrellas, they're not terribly expensive. Now they're more expensive than they used to be because surprise, surprise, you know, claims, but they're still for the value they add, you can get a million-dollar pluck uh, you know, for your home and your auto exposure, usually for less than a thousand dollars extra a year. I mean, I'm talking about you know anywhere from$500 to$1,000, and that's more than it used to be. I used to say usually less than$800 a year, but you know, it's like everything else, the prices for those products have gone up. But you're talking about a million dollars of extra protection for your assets if something crazy like that does happen. And you can make them applicable to your auto insurance as well, which costs more, especially if you've, you know, not got an immaculate driving record. But again, if you cause an auto accident, and even if you've got like the maximum coverage available for your auto insurance, you know, if you cause a multi-vehicle asset, accent, accent, accent, boy, uh, accident, uh, uh, you know, you could very easily go past those liability limits in your base policy. So having that extra coverage, and that's what an umbrella is, it's coverage over and above whatever your base liability coverage on your homeowners or your auto insurance is, that kicks in if you exceed those limits. So if you're exceeding, you know, and we always try to write our homeowners' limits for liability at half a million dollars,$500,000, we recommend maxing out your auto insurance liability, which could be, you know, anywhere from$250 to$500,000 typically. Um if you have a situation where the settlement, the losses that are gonna be stacked against you exceed that, it's probably gonna be a lot more than that. You know, because you're talking about a lot of damages. So you want to make sure that you have enough coverage so that's not gonna be all out of your pocket. Because that talking about a financially ruinous situation. I know that would ruin me. You know?

SPEAKER_01:

Yeah, me too. Me too.

SPEAKER_02:

You know, and I'm not I'm by no means like you know, Mr. Moneybag is over here, but you know, I have a business, you know, I have some assets, so you know I have I have uh I have an umbrella to protect those assets. Yeah, I know people who are got a lot more than I do, financially asset-wise, who do not have that protection, and it worries me sometimes.

SPEAKER_01:

I'm sure. I'm sure. Well, you know, this guy here, I don't have an umbrella policy, and I'm thinking I need one. Let me ask you this. Yeah, I need a colleague.

SPEAKER_02:

So with sort of guys, I'm stating stating my experience in this business.

SPEAKER_01:

Well, good to know because I mean, you know, like you said, the deck collapsing. Who would have thought that the deck would maybe 25 people? But you know, I maybe wouldn't have 25 people on the deck, but but I mean, you never know what's gonna happen. And it that begs a question, too, for a homeowner that has umbrella coverage or liability coverage, does that extend to events that happen off property as well, or does it have to be on the property?

SPEAKER_02:

So it's probably gonna depend on what company you're going with. Generally speaking, I'm gonna say this generally because there's always an exception. Generally speak speaking, it's only going to extend towards properties that are owned by the insured and listed on the policy. So if you have just for example, if you have your your personal, your primary residence, right? Your house, the one you live in, or your dog is anyway, and you know, maybe you have a rental property that you you know rent out, you lease out. Somebody so you have two properties that you and other people are gonna be you know ingressing and egressing out of, and you have your auto insurance. Let's just say you're gonna you know put the plug, you know, put the umbrella on your auto insurance, which I would recommend as well. So you have those three risk factors, and so typically the companies are only going to extend that additional coverage to events that happen on those properties, those owned properties that are listed, or you know, your auto insurance. Now, some companies may extend coverage to other owned properties that are not listed if one of your base policies also extends coverage. So some homeowners insurance policies, you don't see it as much anymore. It used to be more common, but some may extend their liability protection to maybe like a vacate, if you own a vacant lot somewhere, they might extend that liability protection to that lot. So if you're getting an umbrella, you would definitely have to make sure like the carrier would do this if you're really interested in having that coverage extended. But you could ask them, say, look, if the base coverage for my homeowners extends to my vacant lot over there, which isn't listed on the policy, would y'all also extend that? My bet is they're gonna say, well, no, we're not gonna do that. We're gonna have to list that lot on the policy. And you're gonna need to make sure it's listed on your homeowners policy as well, because again, keep in mind, they're only going over on top of what your base home or auto insurance policy is. Um, most most companies are gonna want everything listed very cut and dry because you know, again, that they got to take the the risk factors into into account when they're calculating the rates and everything. So, yeah, it's it's definitely something worth asking. It's definitely something worth asking your your homeowners, asking them, hey, look, you know, if I own a property, like a uh vacant lot that you know my family just uses for picnics, but we might build a house on someday, uh, would you extend your liability coverage to that lot? Because a lot of people just assume that it does, because I think it used to be more common, you know, 30, 40 years ago that it did. I think a lot of people are being gonna be surprised when they find out actually their homeowners insurance policy will not extend that liability to that owned lot. They need to get a separate policy, which you can get. They're vacant land liability policies. They're they're not hard to do, you know. But you know, again, that's something you want to ask for sure.

SPEAKER_01:

I I would imagine if let's say somebody lives in Charlotte or Knoxville or or Nashville and they've got a cabin up in the mountains, you know, up in the smokies somewhere, I'm sure you would have to have a separate policy for that. You couldn't extend liability to cover that structure as well.

SPEAKER_02:

Yeah, well, yeah, I mean, there's like again, generally speaking, that's probably I I would say that's true. There's always exceptions. I know, I know some companies will allow people to add other addresses on uh for liability purposes onto their homeowner's insurance policy. I've seen that, you know. Actually, I did I did uh policy for somebody whose prior insurance had several other addresses listed to extend liability to those specific properties. The danger in that, and I I would say like if you had like a perfect storm situation where you had in the same policy period the same year, if you had a liability claim against something that happened on your personal residence, your primary residence, and also one of the other properties, that liability limit, whatever your liability limit is on your on your on your homeowner's policy, be it$500,000 or a million dollars, that's gonna be the pool that you're gonna have to deal with for that policy period. So if you have two claims on two different properties, even if they'll be covered by the by the policy, if the total amount of damages or or losses awarded to whoever's suing you from those two events exceeds whatever your limit is, it's coming out of pocket. Unless, of course, you have you know an umbrella. So and I would normally just tell people if you own a if you own a rental house or a secondary, like a vacation cabin that your family uses, just get a separate policy with its own base liability and everything. It's simpler. It gives you all all around better protection. You know, it's just again, it's a simpler solution than just adding endorsements onto your your primary home. And again, you run into that danger of hooking those other those other risks to your primary home as well. So I try to stay away from doing that. I have a couple I have a few companies that will let us do that. I try to stay away from that as a solution for people.

SPEAKER_01:

Gotcha. Good advice. Well, how do you how do you help clients determine how much liability they really need?

SPEAKER_02:

Well, I usually just ask people to, you know, honestly consider their total exposure. You know, because everybody has a different exposure. My exposure is not the same as I'm not gonna pick like a mega wealthy person because they self-insure. My my exposure, say, is probably not the same as a coach for the University of Tennessee football football team. Okay, you know, those guys make millions of dollars a year. I'm sure they have, you know, multiple houses, investment portfolios, you know, yada yada yada. I mean, I'm I'm those dudes are multimillionaires, right?

unknown:

Right.

SPEAKER_02:

They may, unless it's like a Nick Saban or something like that, you know, they may not be the kind of person who can genuinely self-insure. So if something crazy were to happen where somebody or a group of people sued them for something happened, those millions and millions of dollars, you know, those assets, those houses, those retirement accounts, you know, whatever, they could be in danger. And actually, I I never I never met an agent who who did insurance for someone at that level, that financial level. I you know, I'm I'm more of a regular person insurance agent. But uh, you know, I I would actually be kind of interested to know like what the underwriting process is like for those kinds of people. Um, but for like people like me, people like you, regular run-of-the-mill folks who work, who save money, who buy houses, who have retirement accounts, you know, I would say one to two million dollars of liability, you know, umbrella liability protection is probably reasonable. You know, if you again, let's say maybe I don't know, maybe you have uh maybe you have an asset, maybe, maybe a family member you know passes away and leaves you some kind of asset that you know puts you above that threshold. Maybe you it's like, well, grandma passed away and she left me her retirement account and it's you know$600,000. You know, it's like, well, that's that's a lot of money, you know, to be at risk if something happens. And again, the lawyers and the courts are going to lay hands on that if it turns out you know they find you guilty of causing harm to somebody or you know, negligence or whatever, you know, maybe push it up, you know, because I I can sell you know liability umbrella policies anywhere from one to five million dollars pretty easily. Uh once you go past that five million dollar mark, the underwriting gets a lot more detailed, a lot more particular because I mean you're you're talking about a big exposure for the company. Uh, and those are really, I think, probably more reserved towards you know heavier financial financial hitters than the normal person. Uh, but like for me, heck, I don't mind saying, I have a million dollar policy. I probably need to increase that at some point in time because, you know, of the business. But, you know, again, you know, I'm I'm nothing special financially. You know, I'm not I'm not poor, I'm not rich, you know, but I do have some assets. And I don't want those to evaporate. Yeah, if I screw up on my own property or God forbid cause a traffic accident where somebody's injured or killed, um, I want to be able to make sure that anybody I accidentally hurt is made as whole as possible without bankrupting me in the process. You know, I want to protect my neighbors, but I also want to protect myself. And again, that's kind of what insurance is all about. That's what uh you know the personal uh liability umbrella policies do for folks. And they're a great product. Very good. If you don't have one, call your agent and ask them about it.

SPEAKER_01:

Definitely. You've scared me to death. So yeah, I'll definitely do that. But yeah, I gotta tell you that's what you do, scare us to death. Well, the thing is, this stuff's really complicated.

SPEAKER_02:

We're Halloween in the insurance industry.

SPEAKER_01:

That's right. That's right.

SPEAKER_02:

Actually, no, we hate it because yeah, yeah.

SPEAKER_01:

Children running around in the dark on the road. Well, thank you again. I mean, this stuff is really complex, and your expertise and clarity makes these topics much easier to understand, particularly for me. So enjoyed it, and we'll catch you catch you on the next episode.

SPEAKER_02:

Thank you, Skip. It's always a pleasure.

SPEAKER_00:

That's a wrap on this episode of the Walters Agency Podcast. Ready to find the right coverage for your home, business, or family? Call or text 423 417 2070 for a free 20 minute consultation. Until next time, stay covered, stay protected, and keep winning with the Walters Agency.